Shop In Town Vs. Shop On Property Help!

Business By zoey2jack Updated 12 Mar 2009 , 4:28am by beck30

zoey2jack Posted 5 Mar 2009 , 3:13pm
post #1 of 23

Okay, I originally was very excited to open a shop in town . My rent is super cheap and it is an awesome location. It will be a cupcake bakery with old fashioned cakes as well. I was thinking of being open 9-5:30 T-F ans Sat 9-3. I was going to hire a part-time baker to come in early since I have two children 11 and 6 who have to be at school at 7:30 a.m. Anyway, I have the option to also build a kitchen on the property and do cakes and cupcakes out of it but it wouldn't be a convenient location and would likely be delivery and few pick-ups. I have been reading discouraging post about the reality of the bakery world and the negative customers. This is starting to make me think twice. I also read alot about the hours you are spending at the bakery and am wondering am I nieve(sp?) to think I would only be there the hours I am open? I know no one can give me the right answer but I would love to here input form anyone willing to give me advice. This is a dream but is it worth the hassel of grouchy customers and long hours away from my family. Do those of you who have kitchens at your home still wish you could open a bakery in your town? Help! I don't know what to do! Thanks for any input. Tammy

22 replies
-K8memphis Posted 5 Mar 2009 , 3:44pm
post #2 of 23

It's not at all about feelings.

Here's your homework:

1) What does your market study tell you?

2) What's your break even point?

zoey2jack Posted 5 Mar 2009 , 4:15pm
post #3 of 23

In our town we have 60,000 people and the only bakeries we have are three grocery stores. I would be the only bakery in our town. I am still working on break even point. I just spoke with my business insurance agent and he says he would not put a bakery on his property since people are so sue happy these days and if they pick up a cake a fall in a hole and break their leg they will sometimes try to go after you and your business. Anyway, I have to still get a quote from him to figure out what I will be paying out monthly in insurance. As far as cost of product, utilities, rent, etc. I am pretty sure I have to have at least 3500.00 a month profit to break even. This is for the in town bakery, not the home. This is also a very rough estimate since I truly have no idea what kind of business I will be doing.

-K8memphis Posted 5 Mar 2009 , 4:27pm
post #4 of 23

You would be one of four bakeries.

Where is your market study?

Do you really think 60,000 people are going to support a cupcake bakery with multiplied thousands of dollars a month??

You have to find out how much traffic you can expect.

I'll give you a C- on break even point because I'm in a generous mood.

You get an I for incomplete at best on market study.

Market study is key.

zoey2jack Posted 5 Mar 2009 , 4:39pm
post #5 of 23

Okay, the owner of the shop has a produce market next door. His average walk in is 500-1000 people on Friday and Sat and about 100 or more a day on the other days. I am not saying everyone will come to me that goes to him but I think that most will come by. I would love to have any suggestions on how to go about doing a market study. I am new to the business world and do not know where to begin.

FromScratch Posted 5 Mar 2009 , 4:41pm
post #6 of 23

In short... yes... you are naive to think that you will only be there during your hours of operation. There is prep and clean-up that must be done and you have to bake the cakes. Paperwork and bills have to be paid... inventory has to be ordered. If your break even amount is $4000/month (which it will most likely be more) then you will have to sell how many cupcakes... add in $1000 for the ingredients to make the cupcakes and if you sell at $4 each you'll have to sell 1250 cupcakes per month just to pay for your cost of doing business. That's about 40 cupcakes a day just to pay the bills. You will have to get people to understand that you cupcakes are worth $4 each so they aren't going to just go to the grocery store and grab a dozen for $5. You have a lot of research to do. Do people in your town appreciate the quality of your type of product... are they going to want to spend the extra money and better yet will they KEEP spending the money once the novelty of a new shop has worn off? Just questions to ask yourself. icon_smile.gif Do I think you can do it? If you really want it and do the leg work I'm sure anything can be done. Just don't jump in before seeing how deep the waters are you know? icon_smile.gif

zoey2jack Posted 5 Mar 2009 , 5:13pm
post #7 of 23

Yes, I guess it looks like I have alot more research to do. Thanks for your suggestions and insite on my situation.

springlakecake Posted 5 Mar 2009 , 5:29pm
post #8 of 23

Have you figured in your start up costs or just your cost of operations?

It's gonna cost more than you figure unless you are very lucky! It always does! Have you ever watched the show "recipe for success" on the Food Network? I just got my license yesterday for my in home separate kitchen. It still cost me 2x as much as I thought it would, however I own it all. I wont have the worry of paying rent. It feels "safer" to me. I am not a big risk taker, so this was as far as I was willing to go. HOWEVER, there obviously are many people who have thriving cake/cupcake businesses in a storefront. I agree, you should do a lot of research before diving in.

indydebi Posted 5 Mar 2009 , 5:48pm
post #9 of 23

Have you written or started writing a business plan? The marketing part of the plan is the bulk of your work and it will answers a lot of questions for you. Please know that a plan isn't thrown together overnight. Mine took 9 months (and that included a CPA, a firm who help folks write biz plans, and $2500 before it was all said and done) and I've seen some folks say their's took over a year.

In any real estate decisions, be it a home or a business, the key factor is location, location, location. If you're going to be a walk-in business, you need walk-in traffic. If you're going to be by appt only, then walk-by traffic isn't as important, but you better pour a TON of money into advertising and marketing to let people know you exist.

What time do the other stores open that are close to the shop in town? Are you going to be selling traditional bakery items or just cakes/cookies? The reason I ask is why are you opening at 9:00 instead of 7:00 or instead of 10:00? (this is a business plan question! icon_wink.gif ). For example, the bulk of the shops in my strip mall don't open until 10:00 .... some not until 11:00. So it's useless for me to be there before 10:00 or 10:30. No cars in the parking lot and I'm not selling doughnuts for the morning office crowd. I pose this question to cause you to think about the decision making process ... are you making the decision based on actual market data? Or because "....9 to 5:30 sounds good!" Depending on what you sell, your market research might show you that 11 to 7 works better than 9 to 5.
(edited to correct a sentence so it made sense! icon_redface.gif )

littlecake Posted 6 Mar 2009 , 12:26am
post #10 of 23

i been in a storefront 7 years, and have been struggling to get it on my own property to cut the overhead for years.

IMHO you either have to go big or go small to do well...or the overhead will eat your lunch.

if i didn't own my home and car, i couldn't afford to do it.

thought i was finally getting ahead TODAY...then i had to get roto rooter to come and service my greasetrap...and a plumber to come tomorrow BUH bye money i slaved for today.

boo hoo

they were advertising for an experianced decorator in the next town, i was tempted...but at 51, i'm gettin to old to download pallets anymore...amazing what they make the decorator do,

i went off on another trail...but i vote for the home bakery.

-K8memphis Posted 6 Mar 2009 , 3:47am
post #11 of 23
Originally Posted by zoey2jack

...I just spoke with my business insurance agent and he says he would not put a bakery on his property since people are so sue happy these days and if they pick up a cake a fall in a hole and break their leg they will sometimes try to go after you and your business.

Tell him, "Then don't do ever do it."

Your insurance agent's job is to sell insurance, not advise you on your best business prospects.

The reason people have insurance is because of what he said. He's not filling me with confidence on your behalf.

Get a different agent.

indydebi Posted 6 Mar 2009 , 4:13am
post #12 of 23
Originally Posted by k8memphis

Originally Posted by zoey2jack

...I just spoke with my business insurance agent and he says he would not put a bakery on his property since people are so sue happy these days and if they pick up a cake a fall in a hole and break their leg they will sometimes try to go after you and your business.

Tell him, "Then don't do ever do it."

Your insurance agent's job is to sell insurance, not advise you on your best business prospects.

The reason people have insurance is because of what he said. He's not filling me with confidence on your behalf.

Get a different agent.

Agree. And remind him that someone could trip and fall and break a leg when they pick up a cake in a retail location, too.

Shoulda Woulda Coulda.

-K8memphis Posted 6 Mar 2009 , 4:37am
post #13 of 23

This is why there's always some room in the "Ashes of Idiots" jar.


LaBellaFlor Posted 6 Mar 2009 , 4:40am
post #14 of 23

I used to work in a bakery and no bakeries do not run just during the store open hours. The bakers used to come in at 4am to start baking the goods for the day. Of course we did doughnuts, pastries, cakes, & cookies. So depending on when you open & what your selling, you may come in at a different time. Good luck! icon_smile.gif

JenWhitlock Posted 6 Mar 2009 , 5:27am
post #15 of 23

I having a bad cake biz day, and this is a great dose of reality.
seriously, thanks to all you great business ladies!

now all I need is for leahs to come over and blow up my rainbow and shoot my puppy icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif
ok, bad joke, but I needed to lighten the mood.

leah_s Posted 6 Mar 2009 , 1:53pm
post #16 of 23

Here I am.

Whatever your retail hours are, I'd figure that you will be working twice that number of hours. Seriously if you're the owner of a startup biz and aren't willing to put in 50-60 hours a week with pretty much no employees you're not ready. With advertising, marketing, baking and consulting with brides, I easily put in those kind of hours - at home - many weeks.

I was building a career when my daughter was young. I was late to her grade school graduation, but I made it to see her walk across the stage. That's the level of the decisions you're going to be faced with when it's family vs. business. Was it worth it?


Because when all is said and done, I kept a roof over our heads and MOST OF ALL my daughter grew up knowing that strong women can do anything. Anything.

JenWhitlock Posted 6 Mar 2009 , 2:15pm
post #17 of 23

yeah! Thank you leahs!
You articulated my problem perfectly.

zoey2jack Posted 6 Mar 2009 , 5:28pm
post #18 of 23

I appreciate all of your input. Yesterday after sitting and clearing my head of everything, I decided that there were too many reasons not to have a shop in town. There are soooo... many variables that come into play. I could name them all but it would take entirely to long. I really feel the best thing I can do for me, my family, my sanity, my customers, etc. Is build a kitchen on my property (poo on the insurance Guy). I called my insurance agent (not the first one I spoke with) and she said it would be no problem but I would have to deed a portion of the property seperate from my residential property or homeowners insurance would drop me. Luckily we live on about 20 acres so this isn't a problem. It is interesting how things work themselves out. I was considering building a kitchen about a year ago and then chickened out. Now that I had both options and saw how overwhelming and howw much outgo I would have with a storefront, the building a kitchen thing seems so simple. Maybe it was just a good motivator. I have such a peace about it and know that I have made the right decision. My husband said he wanted me to follow my dreams but then admitted he was really concerned it would have hurt our family, so he was really happy with my decision. I only work 5-10 hours a week at my job so my kids are used to having me around. Anyway, thanks for all your comments it certainly got me thinking of more than just my family.

littlecake Posted 6 Mar 2009 , 6:24pm
post #19 of 23

I just looked at your have some really awesome stuff! won't have any trouble drawing people to your place.

Good Luck!

Chef_Stef Posted 6 Mar 2009 , 6:34pm
post #20 of 23

Isn't it nice when you have peace about a decision. That means it's the right one for you.

I agonized over this same question and finally decided on a shop in town, after a couple of years of contemplation. My kids are bigger now, which changes everything. I wouldn't ever work away from home when they were smaller, but now they're in middle school and much more self-sufficient, and they're used to me always working from home, either doing medical transcription or running my DH's business.

We had decided to go ahead and build on our property this year, and as we were looking into it (my b.i.l. is a realtor, which really helps), a brand-new retail location about 10 minutes from here turned up, ready to build to suit, with really great terms, in a beautiful perfect spot for what I need. The whole thing is falling together perfectly, so I know this is the right decision now, though at first I wasn't ready to consider working 'somewhere else', and I'm still sort of in shock that it's Really Happening...but it's growing on me.

Since DH and I work together running his business already, we have gotten very good at juggling business requirements and stinkin' long hours, and we are good at keeping "work" out of our family time, which can take some doing--you have to be able to work together and still have a marriage that doesn't include a business meeting in every conversation...icon_smile.gif which we do. He keeps asking me if I know what I'm committing myself to, and I say, "I YOU?" He's used to me always being here managing the entire household and our business, so I have to keep telling him that there will be times when *I* am not available because *I'm* at work...sorta like the 2 and 3 and 4 a.m. cake decorating marathons, only --hopefully-- it won't be as long or as late with the new ovens at the shop. (cross fingers)

You'll love having a place at home to go and work. Keep us posted on your progress, and best of luck!

zoey2jack Posted 6 Mar 2009 , 10:49pm
post #21 of 23

Congrats Chef Stef. That sounds exciting! I know one day I might be able to be in town, but I think I definitely have to crawl before I can walk. My opportunity to have a shop in town now sounded great but when I looked at the big picture it just wasn't something I was ready to tackle. I am just thankful I even have the option to do either. icon_smile.gif

deb12g Posted 11 Mar 2009 , 4:55pm
post #22 of 23

I opened up 2 1/2 yrs. ago. I had a building on my property, so we upgraded to specifications. Some people thought I'd never get business, since I am in a rural location. WRONG!! Once people tried my food/cakes, they kept coming back & referring others to me. I've enlarged my building once, and am starting a new addition shortly.

Having it on my own property, not much overhead, and I can run in & out whenever I want to. Customers are by appointment only. Works wonderfully!

Haven't found any!

beck30 Posted 12 Mar 2009 , 4:28am
post #23 of 23

I agree with marissa, im in the process of putting my sweat and tears into a separate kitchen in our home. I hope to have it done by dec. thats my goal) IM TOO afraid to do it any other way. In my town cakes dond go for all that much and noone sells fondant cakes for over 2 hours away, and the wedding planner said Ill get lots of business but I just dont want the headache of rent and utilities in 2 places and such. I would say go for hme bus. then if it works out go for a shop later, thats what im planning on. good luck

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